Senators link drilling with cap-and-trade

Published 5:30 am, Tuesday, October 6, 2009

WASHINGTON — Republican and Democratic senators negotiating a possible compromise on climate change legislation insisted Tuesday that the measure must include provisions to boost nuclear power and expand offshore drilling.

Sen. Lindsey Graham, R-S.C., who has been huddling with Sen. Joseph Lieberman, I-Conn., and other moderates on the issue, said linking nuclear power and offshore drilling with a cap-and-trade plan for limiting carbon dioxide emissions is “the winning formula” to pushing the measure through the Senate.

The leading climate change bill in the Senate, sponsored by Sens. John Kerry, D-Mass., and Barbara Boxer, D-Calif., gives scant attention to nuclear power and is silent on offshore drilling.

Related Stories

The Kerry-Boxer bill would force owners of oil refineries and power plants and others to comply with progressively tighter limits on greenhouse gas emissions. Polluters could stay within the limits by buying and trading an increasingly smaller pool of permits to release the emissions blamed for climate change.

See plan as energy tax

Many congressional Republicans have decried such a cap-and-trade program as an energy tax that would raise bills for heating homes and powering factories.

Graham said “more than a handful” of Senate Republicans could be persuaded to support a climate change bill if it includes “a robust nuclear power component” and provisions to expand “offshore drilling in a responsible manner.”

“To get a bipartisan bill on climate change, you're going to have to make it attractive for Republicans to vote for a cap-and-trade system,” Graham said.

“There's a way to grow Republican support but it is a give-and-take. Republicans have to give in the area of recognizing that climate change is real and a cap-and-trade system is part of the solution. I'd ask our Democratic colleagues to give on the idea that you can't be serious about climate change solutions if you exclude nuclear power.”

Kerry has been in talks with Graham and other Senate moderates over possible compromises.

The current Kerry-Boxer bill includes a modest nuclear section focused mainly on worker training. But nuclear advocates want to see the measure include loan guarantees to propel new plants — the last one was built in 1990 — and solutions for one of the biggest issues confounding the industry: how to store spent fuel rods.

The measure ultimately could be combined with a broad energy bill sponsored by Sen. Jeff Bingaman, D-N.M., that would expand oil and gas drilling in the Gulf of Mexico, modernize the nation's electric grid and boost U.S. reliance on renewable power sources.

Effort by ‘Gang of 20'

Graham said an offshore drilling plan for the climate bill could be modeled after ideas advanced by Carper, Graham, Klobuchar and other members of a self-titled “Gang of 20” senators.

Last year, the group pushed a plan to open up part of the eastern Gulf of Mexico for new oil and gas exploration and give Georgia, South Carolina, North Carolina and Virginia the option to allow drilling off their shores.

The Kerry-Boxer climate change bill left out details on some major components of a cap-and-trade system, leaving room for as many as six Senate committees to assemble a package that the chamber could debate next year.

Senators will be looking to fill in gaps on how to allocate emissions allowances and whether to include trade protections for U.S. manufacturers if China and other countries don't impose similar greenhouse gas curbs.

Some lawmakers also are likely to push for tough regulation of the new carbon allowances market, as well as trading in carbon “offsets,” or investments in climate-friendly projects such as reforesting.

Gary Gensler, the CFTC chairman, on Tuesday told the Platts Energy Podium that the agency was well positioned to regulate any new carbon markets created by Congress. “Our agency has the expertise to oversee these centralized markets,” he said.